Income Tax News: Urgent! Taxpayers Take Note, Up to 200 percent fine on not filing ITR by due date, Check Details

Income Tax Return-Update (ITR-U) is a crucial for taxpayers to rectify any errors made in their previously submitted Income Tax Returns (ITRs) for the fiscal year 2021 (Assessment Year 2021–22). It provides a means to amend misreported or underreported income, ensuring compliance with tax regulations.

Legal Provisions and Penalties

Under Section 139(8A) of the Income Tax Act, taxpayers are permitted to revise their ITRs within a specified timeframe. According to economic times, failure to correct errors may result in penalties of up to 200% of the tax due, as mandated by Section 270A introduced from A.Y. 2017–18. Prior to this, penalties under Section 271 could reach up to 300% until A.Y. 2016–17.

Deadline and Eligibility for Filing ITR-U

Taxpayers have 24 months after the end of the relevant assessment year to file a revised return, subject to certain guidelines. For FY 2020-21, the deadline is extended until March 31. However, certain individuals are ineligible to file an ITR-U, including those who have already submitted an updated return, individuals filing a loss or nil return, or those undergoing tax proceedings such as search or survey actions.

Conditions for Filing ITR-U and Additional Tax Obligations

ITR-U cannot be used to claim a refund of taxes already paid. Taxpayers must pay additional tax when submitting an updated return, which equals 50% of the total tax and interest due. If the updated return is filed after the deadline but within 12 months of the end of the relevant assessment year, the additional tax is reduced to 25% of the total amount due.

Restrictions on Filing ITR-U

Taxpayers cannot file an updated ITR if there is no new tax liability, or if they seek to obtain or increase their refund. Additionally, individuals undergoing certain tax processes, such as assessment, reassessment, or survey actions, are ineligible to file ITR-U.